Trump’s tariffs carry more questions and fears for business

Donald Trump’s talk about applying new rates for goods from the largest trading partners in America has caused months of uncertainty for business owners.

On Saturday, the president did well with his threats by ordering a new 25% tax on mexico and Canada shipments and raising existing rates for goods from China by 10%.

But that did not stop the questions.

“Is this for a day, is it politically flexible or something that will last four years?” Nikola Palansi, the founder of the Brooklyn PM Spirits. He runs a business with 21 people who imports and sells wine and spirits, about 20% of which come from Mexico.

Trump’s orders have triggered threats that the president has been discussing for months by hitting shipments from the best three trading partners in America, which together represent more than 40% of the approximately 3TN goods that US imports every year.

Canadian oil and other “energy resources” will face a lower 10% rate. But otherwise there will be no exceptions, said the White House.

Trump said tariffs are intended to hold Canada and Mexico responsible for the promises of dealing with illegal immigration and drug trafficking.

The measures come into force on February 4 and must remain in place, “until the crisis is relieved,” according to the orders.

If the plans were not a surprise, they still presented a potentially stunning blow to many businesses, especially for those in North America. The three countries have become strictly related economically after decades of free trade under a contract signed in the 1990s, then known as NAFTA and updated and renamed the Trump administration in USMCA.

Mezcal growth in the US, imported by enterprises such as Palazzi, is part of this change.

Since 2003, the consumption of Tequila and Mescal has grown approximately, increasing at speeds above 7% each year, according to the Council of Distilled Spirits, Commercial Group.

Overall, since the 1990s, the Spiritual Trade between the US and Mexico has grown by over 4000%, said the organization that issued a statement after the president’s announcement, warning that tariffs will “harm the three countries” significantly ” S

For months, Palazzi has raised nervous questions from their suppliers in Mexico, who are usually small, family businesses and may not survive if the tariffs are prolonged.

If he adheres, he said that 25% tax on Mezcal, Tequila and Rum bottles he imports will raise prices – and sales will drop.

“It will definitely have a negative effect on the business. But can you really plan? No,” he said. “Our strategy is a roll-with penetration, wait and see and adapt to any madness, it will unfold.”

Economists say the tariff blow can push Mexico and Canada’s economies into a recession.

Prior to the announcement, Dan Kelly, President of the Canadian Federation of Independent Business, describes the coming tariffs from the United States and expected revenge as “existential” for many members.

“Look, we understand that the government must respond in some way…. But at the same time we urge the government to be careful,” he said, comparing the fee for imports with chemotherapy: “This poisoned his own people to deal with his own people to be on your own people to deal with your own people so that you can try to fight the disease.

“This will have an effect everywhere,” says Sophie Avernin, director of De Grandes Viñedos de Francia in Mexico, noting that many Americans own a Mexican brands of alcohol and the Modelo beer is actually the property of a Belgian company.

Trump, who perceived tariffs as a tool for dealing with problems distant from commerce, has rejected concerns about collateral for security in the US economy.

But analysts have warned that measures will weigh on growth, raise prices and cost economic jobs – approximately 286,000, according to the tax foundation forecasts without including revenge.

Those in the alcohol business have said the industry has already struggled to get out of the shadow of the pandemic and its shocks, including inflation, which prompted many Americans to give up nutrition and drinking.

The smaller companies that usually have a smaller financial pillow and the ability to absorb a sudden 25% jump in costs will bear the main weight of the interruption.

“I’m quite disappointed,” said California importer Ben Scott, whose nine human business Pueblo de Sabor carries brands from Mexico like Mal Bien and Lalocura.

“There is only a huge price that will affect so many people in a way other than paying a few dollars more for a cocktail, which does not sound like a tragedy.”

Fred Sanchez spent years insisting on expanding his business, Bad Hombre Importing, a small importer based in California and a Mexican agave distributor, based on Agave such as Agua del Sol, and has recently worked on transactions in New York and Illinois.

But his potential partners began to hesitate as Trump’s Tariff talk increased last year.

Now, instead of expanding, he is considering selling his alcohol stocks and possible exclusion. He said he had little capacity to absorb the cost jump and saw little opportunity to raise prices in the current economy.

“25% is just not something that we can realize to the user realistically,” he said.

Sanchez said he believed Trump could use tariffs as a tactic for negotiation and the tax could be short -lived. However, his business has already been damaged.